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[Tor]

Doesnt AJC work for goldman? didnt she say she was looking for 1600 spx by year end?? Goldman warns of a substantial US recession By Ambrose Evans-Pritchard, International Business Editor Last Updated: 12:02am GMT 18/11/2007 Goldman Sachs has sent a shudder through the debt markets, warning that sub-prime mortgage losses could force banks to slash lending by $2,000bn (£980bn) and push the United States into a deep recession. Ambrose Evans-Pritchard: a whisper in your ear from City gurus Fund managers hold their nerve despite fears Jan Hatzius, US chief economist for the Wall Street bank, said potential losses of $400bn from the whole debacle did not begin to capture the scale of any squeeze on bank lending. Goldman Sachs said there was a growing risk that US troubles would spread to Britain and Europe "The likely mortgage credit losses pose a significantly bigger macroeconomic risk than generally recognized," he wrote. "It is easy to see how such a shock could produce a substantial recession or a long period of very sluggish growth," he wrote. Mr Hatzius said banks would have to shrink their lending by $10 for every $1 in losses in order to maintain capital ratios, vastly magnifying the effects as lending multiples kick into reverse. "The macroeconomic consequences could be quite dramatic. If leveraged investors see $200bn of the $400bn aggregate credit loss, they might need to scale back their lending by $2 trillion. This is a large shock," he said. advertisement The warning comes as the bank's closely watch Global Leading Indicator - a barometer of the world economy - continued to slow in November. Goldman Sachs said there was a growing risk that US troubles would spread to Britain and Europe. This casts doubts on the "decoupling" thesis that the world can pick up the growth baton as America slows, keeping corporate profits buoyant. "This matters for markets since the assumption of 'decoupling' is now quite well embedded in asset prices. We think that cyclical exposure remains dangerous right here," said the bank, referring to riskier assets and industrial commodities such as copper. On Thursday the US Federal Reserve pumped $47bn into the banking system, the biggest one-day infusion of liquidity since the 9/11 Twin Towers attack in 2001. The Fed's survey of US industrial output showed 0.5pc fall in October, with big drops in furniture linked to the property slump. Wall Street shrugged off the data, betting instead that easing inflation pressures would clear the way for further interest rate cuts. Dr Suki Mann, a credit analyst at Société Générale, said the corporate bond markets in Europe were still under stress a full four months after the credit crisis began. 'A-rated' Commerzbank faced stiff spreads in a closely-watched bond issue this week. "These companies are having to pay at least 100 basis points extra over Euribor, and there's no end in sight. A lot of corporations are liquid and have little funding pressure. But if you are a company that needs funding, or if you are a bank that can't borrow, you're worried," he said. The iTraxx Crossover index measuring default insurance on mid to low corporate bonds rose to 384 yesterday, approaching August crisis levels. Separately, the US Treasury data showed that Asian countries - joined by France - continued to pull money of the US bond markets in September. The net sales of US Treasury bonds by country were: China ($3.5bn), France ($3.5bn), Japan ($3.4bn), Korea ($3.2bn). This was offset by inflows from Brazil and petrodollar states investing through London banks. The total outflow for all forms of investment was $14.7bn, an improvement on the record flight of $150.7bn in August but not enough to cover the monthly US current account deficit of $55bn. The dollar held up today, boosted by fresh assurances from US Treasury Secretary Hank Paulson that the Washington is not turning a blind eye after the dramatic slide in the Greenback this Autumn. "Our economy, like any other, goes through ups and downs. But I believe the U.S. economy is going to continue to grow and its fundamental long-term strength is going to be reflected in our currency," he said.

[*JB*]

I have little doubt about what Goldman is saying here. I ALSO have NO doubt that they are short this market BIG time -- or have other postions that will benifit from fear spreading. Goldman is THE most active trading house on Wall Street, and makes far more money in their back office than in the front. Also, they make a ton of money from their commisions in the "high networth client advisory" services division -- I know one VP of that division very well...this is not counter to how they operate. Also, AJC is no longer seen as "a market sage" after 2000. Just like Soros, when they speak in public it's for their own pocket book, not yours.

Edited by *JB*, 22 November 2007 - 06:45 AM.

[Drano]

AJC touting stocks has been a reliable sign of an imminent downmove for years. I think there's even a website somewhere that has a chart of the SPX with here CNBC appearances marked on it.

[ed rader]

I have little doubt about what Goldman is saying here.

I ALSO have NO doubt that they are short this market BIG time -- or have other postions that will benifit from fear spreading.

Goldman is THE most active trading house on Wall Street, and makes far more money in their back office than in the front.

Also, they make a ton of money from their commisions in the "high networth client advisory" services division -- I know one VP of that division very well...this is not counter to how they operate.

Also, AJC is no longer seen as "a market sage" after 2000.

Just like Soros, when they speak in public it's for their own pocket book, not yours.[color=#FF0000]

what these guys say on CNBC is not what they tell each other.

ed rader

[Trend-Signals]

I have little doubt about what Goldman is saying here.

I ALSO have NO doubt that they are short this market BIG time -- or have other postions that will benifit from fear spreading.

Goldman is THE most active trading house on Wall Street, and makes far more money in their back office than in the front.

Also, they make a ton of money from their commisions in the "high networth client advisory" services division -- I know one VP of that division very well...this is not counter to how they operate.

Also, AJC is no longer seen as "a market sage" after 2000.

Just like Soros, when they speak in public it's for their own pocket book, not yours.

Exactly, this is what was saying on my iHub board. Goldman does not care which way market moves up or down since they make money both ways.

Euro markets seem to be brainwashed with bearish market views by certain bear market commentators, of course we have here as well, but euro markets seem to be more bearish on US than here.